Which of the following is true of the degree of total leverage (DTL)?
A) It is the percentage change in EPS that results from a given percentage change in EBIT.
B) It is the level of EBIT at which EPS equals zero.
C) It is the percentage change in NOI (or EBIT) associated with a given percentage change in sales.
D) It represents the level of production and sales at which net operating income is zero.
E) It is the percentage change in EPS that results from a 1 percent change in sales.

Question

Quizplus · Accepted Answer

The degree of total leverage (DTL) measures the sensitivity of a company's earnings per share (EPS) to changes in sales, indicating the percentage change in EPS resulting from a 1 percent change in sales.

Which of the Following Is True of the Degree of Total